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Forbes Markets Rewind: From Twitter Mayhem To Apple's Cash Splash

One of earnings season’s heaviest weeks featured results from Corporate America’s two biggest companies – AppleApple and Exxon MobilExxon Mobil – a slew of mixed reports elsewhere and further evidence of follow-through from the U.S. housing recovery.

The Dow Jones industrial average gained 1.1% over five days to finish the week at 14,713, the S&P 500 gained 1.7% to 1,582 and the Nasdaq 2.3% to 3,279.

In the week’s strangest story, hackers seized control of the Associated Press Twitter feed Tuesday in order to put out a false report of an attack at the White House and injuries to President Barack Obama. Though the fake tweet was quickly refuted, the stock market drastically sold off in a brief span:

The tweet did reinforce just how rapidly the market reacts to information though, with the Dow Jones industrial average briefly surrendering almost its entire triple-digit gain before snapping higher when it became clear the tweet was fake.

The S&P and Nasdaq experienced similar knee-jerk slides before quickly recovering.

The earnings picture came into focus in a week with well over one hundred S&P 500 components reporting, and while companies mostly topped bottom-line consensus estimates, light revenue and shaky guidance were more common than not. CaterpillarCaterpillar was among the companies to cut its outlook:

The mixed picture took a bite out of Caterpillar’s guidance. The company now expects earnings of $7.00 per share for 2013 on $57-$61 billion in revenue. That is down from a previous call for $7-$9 per share on $60-$68 billion in revenue.

The forecast cut was not a complete shock, given the stock’s year-to-date slide. With the broader market up nearly double-digits so far in 2013, Caterpillar shares have fallen more than 10%.

The deluge of reports was not without its bright spots though. NetflixNetflix shares raced higher after its profit surprised the Street Monday:

Quarterly revenue topped surpassed ten figures for the first time, with $1.02 billion. Netflix says it added 3 million streaming customers in the period, as it debuted more original content, the widely praised, Kevin Spacey-led House of Cards. Another show, Hemlock Grove, created by horror director Eli Roth, premiered last week. NextNext up: new episodes of the short-lived, cult-favorite, Arrested Development.

Meanwhile, PulteGroup cited pricing power in its quarterly report and fellow home builder DR. Horton delivered solid results to help reinforce the positive implications of a housing recovery that continues to gain momentum. (See “Pricing Power Boosts Pulte, Bodes Well For Builders.”)

Apple was a standout in the swirl of earnings, no surprise, but not because its results were impressive. The iPhone-maker posted its first year-over-year profit decline in a decade because of declining margins, but the bigger story was what came along with the earnings report.

With investors including hedge fund billionaire David Einhorn calling for the company to tap its massive cash hoard, Apple added $50 billion to its share repurchase program and hiked its dividend 15%. Any enthusiasm for the increased capital return was tempered though, when Tim Cook said the company’s next wave of new products won’t come until the fall, setting the stage for at least one more rocky quarter:

Mark Spellman built a small Apple position late last year and modestly added to it in early 2013. He agrees that the capital return caps the downside, but with Apple’s profit and margin sustainability unclear he does not feel compelled to buy the stock here.

Investors hoping that the quarters to come will be better for the companies they own got something of a silver lining in Friday’s first-quarter GDP report.

The government’s first estimate pegs growth in the January-March period at 2.5%. That was shy of estimates that had ratcheted up above 3%, but still much better than the 0.4% rate from the fourth quarter:

The advance estimate — the Bureau of Economic Analysis will revise the figure twice if necessary over the next two months — drew positive contributions from consumer spending, inventory investment, exports and residential investment, while reduced government spending, from the federal down to the local level, and increased imports had a negative impact.

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